Equity Structure in a Start-Up Example

May 24, 2011

While there is no right or wrong way to structure equity in a start-up, there’s definitely a good example of an equity structure here for you.  This is in no way considered to be legal advice either (blah, blah typical disclosures)…but rather just an example about how others have their equity structure.  Some things here you may find helpful for your situation.

Equity Structure Example #1:

Start-up “Ace” was founded by 3 committed founders, who anticipate angel investors..but are determined not to give up the majority of their company.

A Stock

Voting shares, are also sometimes known as founders equity.  This start-up has dedicated founders that fit their roles very nicely, and did not worry about replacing any of their founders.

51% of their company stock went to founders shares:

  • Founder & CEO- 17%
  • Co-Founder & COO- 17%
  • Co-Founder & CTO- 17%

B Stock

Non-voting shares.  Start-up “Ace”, in this example, allocated 49% of their company to non-voting shares.

  • 4% of equity to a dedicated business developer & consultant.
  • 5% of equity, split among 5 board advisors.
  • 40% of equity to an angel investor.

Key points here in this start-up equity structure:

  • The founders remain to have the majority of the company at 51%.
  • These founders equity structure is based on equal partnership among the leaders.

You can also use EZ Numbers (made just for startups), it will automatically calculate most of this for you.



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